Home >politics >news >‘Attack on inflation should yield results in 8 weeks’

New Delhi: The measures taken by the government are certain to bring down inflation, running at a three-and-a-half year high, to 6-6.5% in the next six to eight weeks, Ashwani Kumar, minister of state for commerce and industry, said on Thursday. Fresh measures were being considered and “all the energies of the government are focused on attacking inflation from all angles".

On war-footing: Minister of state for finance Ashwani Kumar says the government’s focus is on attacking inflation from all angles.

Wholesale prices rose 7.57% in the week ended 19 April from a year earlier, the government said on 2 May. Inflation accelerated to a median 7.66% the following week, according to a survey of 15 economists by ‘Bloomberg’. The report is due at noon on Friday.

Kumar said that estimates made by the economic advisor’s office, department of industrial policy and promotion, have found a downtrend in prices of many commodities.

For instance, since 1 March, wholesale or factory-gate prices of edible oils had dropped by close to 19%, pulses by 7.7%, wheat by more than 9%, and cement by close to 3%. Even rice prices had fallen by a modest 1.6%.

The ban on futures trading in soya oil, potato, chana or black gram, and rubber, announced on Wednesday night, was to discourage speculation as also to rein in expectations, he said.

The government is trying to persuade cement makers to cut prices and they will respond in two to three days, he said. Cement producers are under pressure to cut prices by Rs10-20 a bag, as rise in prices have hit the construction sector and several state-funded road and railway projects.

Kumar urged industry to shun short-term profits in favour of longer-term strategies that will benefit the nation, echoing recent statements made by Singh.

-Paromita Shastri

(Kartik Goyal from Bloomberg contributed to this story.)

Regulator to seek lifting of trading ban in four months

Kochi: The country’s commodity market regulator will seek lifting of the futures trading bans on seven food commodities and rubber when the latest suspension comes up for review in September, said B.C. Khatua, chairman of the Forward Markets Commission (FMC).

Trading in futures contracts in rubber, potato, channa and soya oil was suspended late Wednesday for at least four months, extending last year’s ban on wheat, rice and pulses tur and urad, as the country fights rising inflation.

Khatua said the ban was “unfortunate". He also said trading in rubber is not linked to inflation and is well aligned with the international market.

Those who have entered into contracts in the banned commodities would have to square off their positions, he said.

Sajen Peter, chairman of government trade promotion body Rubber Board, said the ban on rubber trading will not have any impact on the market. The Rubber Board is not in favour of futures trading, he said.

The recent spurt in rubber prices is because of growing demand and is linked to rising crude oil prices, which makes the tyre sector reduce its use of synthetic rubber, a product of crude oil, Peter added.

But Rajiv Budhiraja, director general of the Automotive Tyre Manufacturers’ Association, the largest consumer of natural rubber in the country, welcomed the ban and said the government should also take steps to control hoarding.

He said the association has been demanding a ban on futures trade as it is mainly driven by speculation.


Tata Steel raises Rs2,000 crore

Mumbai: The country’s biggest private sector steel maker, Tata Steel Ltd, has raised Rs2,000 crore through private placement of rupee debentures as part of its long-term financing plan.

“Tata Steel has raised Rs2,000 crore, including a green shoe option, through private placement of redeemable non-convertible rupee debentures," the company said in a filing to the Bombay Stock Exchange (BSE).

The issue, which closed on 6 May, opened with an initial size of Rs750 crore and the deemed date of allotment for the debentures was 7 May.

An application has been made to list the debentures on the wholesale debt market segment of the National Stock Exchange (NSE), Tata Steel added.

Tata Steel shares gained 2.51% to close at Rs845.65 on BSE.


Bhel plans Rs1,000 cr spend to raise capacity

New Delhi: Energy equipment maker Bharat Heavy Electricals Ltd (Bhel) is spending Rs1,000 crore to expand the capacity of a boiler plant in Tiruchirappalli in Tamil Nadu, an official said on Thursday.

When the expansion is completed by July next year, the plant will be able to make boilers that can totally produce 10,000MW, up from 5,750MW now, R.N. Misra, executive director of the unit, said.

“This will get commissioned in June-July 2009," Misra said. He said the plant had orders worth Rs17000-18000 crore, and expects orders for two 800MW boilers from a joint venture with Tamil Nadu’s state-run utility.


Jubilant acquires Speciality Molecules

New Delhi: Pharmaceutical company Jubilant Organosys Ltd on Thursday said it has acquired Speciality Molecules Pvt. Ltd for Rs19.95 crore.

Speciality Molecules develops, manufactures and sells speciality intermediates, which include primarily pyridine derivatives that are used in pharmaceuticals and other life science industry, Jubilant said in a statement.

The acquisition will be accretive to Jubilant’s earnings from the date of acquisition and will strengthen the company’s ability to provide comprehensive offering of pyridine derivatives to the customers, the statement added.

Some members of the Bhartia family, which runs Jubilant, have a majority stake in HT Media Ltd, publisher of ‘Mint’.

-Staff Writer

Birla Corp Q4 net falls 14.5% on low realization

Kolkata: Cement maker Birla Corp. on Thursday posted a 14.5% fall in net profit for the quarter to March, on lower realizations and rise in input costs, lagging analyst estimates.

Net profit in the fourth quarter fell to Rs86.56 crore from Rs101 crore a year ago, on net sales of Rs488 crore.

A ‘Reuters’ poll of analysts had forecast a net profit of Rs109 crore on sales of Rs464 crore.

“Lower realization coupled with increase in input cost in cement led to fall in profits," chairman R.S. Lodha said in a statement.

Suspension of work in its unit in eastern India, producing about 1.6 million tonnes of cement, contributed to the fall in profits, the statement said.


Banks get approval for joint life insurance co

Bangalore: The Insurance Regulatory and Development Authority has given licence to Canara Bank, HSBC Insurance (Asia-Pacific) Holdings Ltd and Oriental Bank of Commerce to jointly launch a life insurance company in India.

The new company, called Canara HSBC Oriental Bank of Commerce Life Insurance Co. Ltd, has already been capitalized at Rs325 crore.

In addition to the regulatory approval, a project team has also been established in Gurgaon, near New Delhi, to build the operational and sales support capability that will be needed to serve the distribution reach of the three partners.

-Deepti Chaudhary

MD Mallya to head Bank of Baroda

Mumbai: State-run Bank of Baroda (BoB) said on Thursday the government has appointed M.D. Mallya as the chairman and managing director of the bank. Mallya, who was earlier the chairman and managing director of state-run Bank of Maharashtra, took over his new assignment from Wednesday and would continue until 30 November 2012, or until further orders, the bank said in a statement.


PE deals value up 31% between Jan-April

Mumbai: The value of private equity, or PE, deals went up by 31% to $4.94 billion (Rs20,649 crore) across 156 deals between January and April 2008, according to consulting firm Grant Thornton India.

This compares with 136 PE deals worth $3.42 billion in the same period last year. However, this upturn was put in the shade by a drastic drop between March and April.

The value of deals plummeted by more than half to $560 million (across 32 deals) in April 2008 from $1.21 billion (across 35 deals) in March 2008.

Merger and acquisition deals saw larger drops. The number of deals shrunk by 21% to 166 for the first four months of 2008 compared with the same period last year. The deal value for this period shrank 3.5 times to $10.73 billion in 2008 from $37.82 billion in 2007.

-Staff Writer

Panel may clear DLF, PepsiCo issues today

New Delhi: Two items listed on Friday’s agenda before the foreign investment promotion board (FIPB) are waiving the divestment clause in PepsiCo India equity and whether DLF Ltd can bring in foreign direct investments worth $150 million (Rs627 crore) for a Bangalore project, according to persons familiar with the matter.

In the case of beverages major PepsiCo, the government is likely to waive the disinvestment clause, which requires a foreign company to offload 49% equity in favour of Indian shareholders. The board may agree to waive the clause as the ministry of food processing and department of industrial policy and promotion have already given their consent. At the time of entry in India, the multinational company had agreed to offload 49% of its equity in favour of Indian shareholders. However, the policy was later changed permitting foreign companies to take 100% stake in the food processing and other sectors.

In the second case, the country’s largest realty firm DLF, which has tied up with Dubai-based developer Limitless for developing Rs60,000-crore township in Bangalore, has sought government approval for bringing in foreign direct investments worth $150 million. While persons familiar with the matter say this matter too is likely to be approved, finance minister P. Chidambaram would give final clearance after the Board’s recommendation. Limitless, a part of Dubai World Company, will initially bring 150 million dollars as equity to part finance the project, market sources said. The realty firm would develop the project in a 50:50 joint venture with Limitless.


Reliance Retail, M&S seek nod for jt venture

New Delhi: Reliance Retail Ltd and Marks and Spencer Group Plc. (M&S) have filed an application with the Foreign Investment Promotion Board to set up a single-brand retail subsidiary in the country. The UK firm will hold 51% stake in Marks and Spencer Reliance India Pvt. Ltd and Reliance Retail, a unit of Reliance Industries Ltd, the rest.

India allows 51% overseas ownership in so-called single-brand retailing that sells products under a single brand.

The joint venture plans to invest about £29 million (Rs236.6 crore) and will open up to 50 M&S branded stores in the next five years.

-Rasul Bailay

Raymond told to deposit Rs16 crore in excise case

Mumbai: The Bombay high court has ordered garment firm Raymond Ltd to deposit Rs16 crore in cash and a bank guarantee of the same amount with the excise department in a duty evasion case. According to the order passed by the court on Tuesday, if the amount and the bank guarantee is not deposited within two weeks, the interim protection from arrest granted to Raymond’s general manager Vasant Naag would lapse. The excise department contended that Raymond had claimed excise exemption last year on Naag’s advice, when it was not entitled to the same.

Fearing arrest, Naag had moved the high court. The court on 9 April had granted him interim protection from arrest.

On 6 May, after hearing the excise department’s argument, a division bench extended the interim protection, but on the condition that the company deposits Rs16 crore in cash and a bank guarantee with the department.


States, UTs must have policy on number plates

New Delhi: In a move to combat terrorism and protect innocent victims of terrorist violence in the country, the Supreme Court on Thursday directed the state governments and union territories (UT) to come up with a policy to implement high security number plates for all vehicles.

The order came on public interest litigation filed in 2005 by Maninderjit Singh Bitta, president of the All-India Anti-Terrorist Front, an anti-terrorism movement. The petition had sought directions to implement number plates with holograms made of chromium.

A bench headed by Justice A. Pasyat gave the state goverments and union territories six months to prepare a policy to effectively introduce high security number plates for all vehicles.

-Staff Writer

Proceedings against MF Husain quashed

New Delhi: Artist M.F. Husain got relief on Thursday when the Delhi high court quashed the criminal proceedings initiated against him for allegedly hurting public sentiments through some of his nudist paintings.

“The allegations made against the painter are baseless and it would not be proper to hold that he had a deliberate intention to manifestly insult Bharat Mata," justice Sanjay Kishan Kaul said after observing that nudity is part of contemporary art.

Husain’s paintings of Bharat Mata as well as of gods and goddesses had created a furore resulting in several threats from right wing groups like the Vishwa Hindu Parishad and the Bajrang Dal after which he was living in self-imposed exile in Dubai.

“A painter at 90 deserves to be in his home--painting his canvas," the judge said quashing the proceedings in three cases against the 92-year-old painter.

The proceedings against the painter were initiated on the basis of complaints filed in Panderpur (Maharastra), Rajkot (Gujarat) and Indore(Madhya Pradesh) alleging that his paintings were obscene and hurt public sentiments.


RBI relaxes lending rules for core projects

Mumbai: To encourage banks to earmark more funds to infrastructure sector projects at competitive rates, the Reserve Bank of India or RBI on Thursday relaxed the lending norms for such projects.

In a notification, RBI said bank loans to infrastructure projects would be treated as sub-standard only if commercial production is delayed by more than two years over the date originally envisaged, instead of the present norm of one year.

“If the date of commercial production extends beyond a period of two years (as against the current norm of one year) after the completion of the project, as originally envisaged, the account should be treated as sub-standard", RBI said in a notification.

The central bank’s decision follows RBI Governor Y.V. Reddy’s announcement in the annual credit policy unveiled on 29 April 2008.

RBI, the notification said, has decided to modify the asset classification norms in view of the representations pertaining “to delays in completion of the projects for legal and other extraneous reasons."

Under the asset classification norms, the banks are required to make a minimum provision of 10% for sub-standard assets. The provisioning requirement goes up to 20 per cent in case of unsecured assets.


Heads of CEI to meet on 14 May to take stock

New Delhi: The Centre has convened a meeting of heads of all Centrally-funded educational institutes of higher learning including Indian Institutes of Technology (IIT) and Indian Institutes of Management (IIM) here on 14 May to take stock of the implementation of the other backward classes or OBC reservation.

The meeting to be chaired by human resources development minister Arjun Singh would hear the status of the OBC implementation as also the problems being faced by these institutes, ministry sources said.

The institutes may also come up with their demands for more resources to implement the quota in a staggered manner over the next three years.


Less corrupt India’s GDP ‘can leap to $28 trillion’

New Delhi: India can increase its gross domestic deposit (GDP) by a staggering $28.2 trillion (Rs1,178.76 trillion) by 2020 if it improves human development index and becomes less corrupt, world renowned economist C.K. Prahalad has said.

India’s poor tally of 3.3 on the Corruption Perception Index (CPI) on the scale of 10, a ranking done by Transparency International in 2006, showed that very few others were perceived to be worse than the world’s second populous country.

According to Prahalad’s calculations, if India were able to check the menace of corruption and reaches on the seventh rank (near the US), and achieves the 20th position out of 175 in Human Development Index (HDI) of the UN, the country’s per capita income will move dramatically to $25,000 from the current level of $3,800, based on the Purchasing Power Parity (local buying capacity).

The GDP gap this represents in total is 28.2 trillion dollars, the Professor at the Ross School of Business, University of Michigan, the US, said here at a CII lecture on ‘India @ 75´ on Thursday.

The poor quality of human development is not about lack of resources but “it is about the level of corruption in the development of resources," Prahalad said.


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